Nicolas Sarkozy’s economic reform and the sticky issue of equality

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“How do you get anything done?” asked a colleague from the United States. “It seems like there’s another holiday in France every week.”

It was a good question. We had no good answer.

“The answer is that things don’t get done,” my wife volunteered. “That’s the trouble. And that’s why this election in France was so important. It was a clear choice, between someone who wanted to continue in the direction France has been going for the last 20 years, and someone who offered something new.

“I’m not saying that Nicolas Sarkozy is a Maggie Thatcher. He’s not. He’s in favour of protectionism and government intervention. But this is France…who isn’t? But at least he understands that the country has to let people work…and let them make money…or it won’t be able to afford all these social welfare benefits.”

Liberté. Egalité. Fraternité. No one really cares about liberty in France. They toss out the word like a gum wrapper; they know it has no value. And no one knows what fraternity means. But equality has a way of sticking to their fingers.

There are two forms of equality. There is ‘equality before the law,’ otherwise known as equality of opportunity. And there is ‘equality of results.’ As a society matures, it generally shifts from caring about the first kind to worrying about the second. When people have the same opportunities, the results are very unequal. One man squanders his time; another uses it diligently. One saves his money; another invests it. At first, the differences are barely noticeable. But they build up like compound interest.

Then come the calls for equality of results. People want a ‘fair share’ of what other people have created. They want to redistribute the wealth. They want a New Deal. Of course, the deal they end up getting is only ‘fair’ if you like the results. And when government intervenes to distribute wealth, few people are satisfied. Either they feel they did not get enough or that others got too much.

What’s more, the act of taking money away from the people who earned it, and giving it to people who did not, has a discouraging effect on individual enterprise. Economies slow down. Less wealth is produced. Gradually people come to recognise that the new system of redistribution and regulations is making them all poorer. Then, they demand a new set of reforms.

That is what seems to be happening in France.

Sunday night, in Paris…demonstrators burned cars and rioted. Hundreds were arrested.

Nicolas Sarkozy is a law and order guy. It will be interesting to see how he reacts to the provocations that are surely coming.

Bill Bonner
The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
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